Valeant Flash Crashes On Report CVS Terminates Its Philidor From Caremark Pharmacy Network

Tyler Durden's picture

A few days ago we laid out Valeant's "Enron" org chart, laying out the extensive, and previously undocumented and in fact, secret, relationships between Valeant and Philidor - the specialty pharmacy whose sole customer is Valeant.

 

As a reminder, it was the revelation of Philidor's shady existence that was the reason for the rout that slashed the price of Valeant stock by more than half last week.

And while both the company and its various shareholders, pardon the pun, valiantly defended the company and its exposure to and from Philidor - claiming there is nothing illegal in the troubling disclosures - moments ago VRX stock flash crashed...

 

... on the following news from Dow Jones:

  • CVS TERMINATES PHILIDOR FROM CAREMARK PBM NETWORK, DJ SAYS
  • CVS CITES 'NONCOMPLIANCE' W/ PROVIDER PACT ON PHILIDOR
  • CVS MOVE BASED ON RECENT AUDITS OF PHILIDOR, DJ SAYS

Recall that Philidor is a sizable 7% of Valeant's bottom line, as per its own slides:

  • In Q3 2015, Philidor represented 6.8% of total Valeant revenue
  • In Q3 2015, Philidor represented ~7% of Valeant EBITA

And where CVS goes, others will promptly follow, not only leading to an promptly termination of any and all overinvoicing benefits Philidor provided to Valeant, but leading to a crack down on specialty pharma organizations everywhere, and likely finally inviting a federal inquiry into just what is going on, because for a pharmacy to admit that there was fire where until just now there was nothing but smoke, not even the Feds can ignore that.

Perhaps in light of this news, VRX shareholder Sequoia will reassess its hardy defense of the company as disclosed earlier today in the following letter, which came just hours before the same fund also announced two of its members resigned as independent directors from Valeant.

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Paveway IV's picture

Damn - Andrew Left is still at it with Citron. Good on him. I use to love to read all the short seller's stuff back in the China small-cap scammer days. It was like free money for a while there. 

Valeant must be going full-retard about now. Damn you, short sellers and your fact-things!

Vampyroteuthis infernalis's picture

Ackman pissed his pants!  Ha ha ha ha ha! Enron eat your heart out!

NoDebt's picture

"The price of healthcare will necessarily skyrocket."  (Paraphrasing somebody, I forget who)

Valeant and Ackman can both burn in hell.  They deserve eachother.

 

Dolar in a vortex's picture

Everyone in the derm industry has been waiting years for this dive.

Nobody For President's picture

...because for a pharmacy to admit that there was fire where until just now there was nothing but smoke, not even the Feds can ignore that.

 

Wanna bet? The Feds can and have ignored all manner of misdeeds and bullshit - how many TBTF bankers have gone to jai?. How many TBTF phara execs have gone to jail for their outrageous prices on drugs in the USA?

The Feds will ignore it unless some Central Bankers get irrtitated...


oddjob's picture

Here's a list of some fund mangers and analysts views and advice on Valeant. Quite telling to say the least.

http://www.stockchase.com/company/view/194/sort/date/page/3/direction/desc/max/15

SillySalesmanQuestion's picture

Die you pigs, flame em shorts!

xrxs's picture

That was a joy to watch.  I had this up, and it was ~115.  I walked down the hall and came back and it was at 108.  I had to do a double check.  Ackman is doing a call tomorrow, and with this as a prelude, it should be interesting.

hcho3's picture

Valeant is not a drug company. It is a speculative company. It is a hotel for Hedge funds. Look at their boards. Look at their investors. They are spending 3% on their R&D. They are spending money on M&A. That's all they care about. By doing many M&A, they can just raise the prices on drugs and pass the costs on consumers. 

They have no vision. All they care about is profit. They don't care if patient is dying or not. All they care about is money. 

 

xrxs's picture

Under 100 AH.  OUCH!!

inhibi's picture

Wow that letter to the shareholder....what complete and utter nonsense

 

R&D low returns? Yeah short term!

 

But no R&D? So I guess its merely a shell of stagnant pharmceutical companies, tied together by fraud. Yeah an absolutely brilliant plan.

Rehab Willie's picture

This story could have been an episode of the Sopranos.
false invoices, missing inventory and insurance claims, sounds like a gangsters dream

pupdog1's picture

Americans are finding out quickly that Big Pharma is as crooked as the US banking industry and Wall Street.